Pound Struggles for Traction Against US Dollar

Barbara Zigah

US dollar strengthens against pound; US labor situation concerning.

GBP/USDA strengthening US dollar helped push the GBP/USD pair below the $1.35 level for the first time this year. Expectations that more stimulus will be forthcoming in the US with the new Biden administration, as well as the anticipation of a worsening scenario in the UK with the spreading coronavirus have weighed heavily on the pound. In the UK, the government announced that there would be more than half a dozen large-scale centers where COVID-19 vaccinations would be distributed; the intent of the government is to ensure that the most vulnerable are immunized by the middle of next month. Markets are also pricing in the possibility that the Bank of England could move to a negative rate environment later this year; one of the BoE's policymakers is due to give a speech about that possibility later today.

In London trading, as of 11:04 am, the GBP/USD was trading lower at $1.3497, a loss of 0.4896% and off the session trough of $1.34818. The EUR/GBP was higher at 0.9015 pence, a gain of 0.0555%; the pair has ranged from a low of 0.89983 pence to a high of 0.90375 pence. The GBP/JPY was lower at 140.48 yen, down 0.3122%.

US Labor Situation a Concern

While the US dollar appears to be regaining positive momentum, analysts say that the labor news, which was released last Friday, was of some concern. The US Department of Labor reported that December's non-farm payrolls, or private sector jobs, saw its first drop in eight months, coming out at -140,000 against an expected 71,000. With the coronavirus surging again across the US, analysts fear that January's numbers could mimic these. Achieving full employment is one of the dual mandates of the Federal Reserve Bank, along with price stability. The Biden administration has not yet named a successor to the Trump-appointed Federal Reserve Chairman Jerome Powell. The EUR/USD was trading at $1.2167, down 0.4698%, while the USD/JPY was higher at 104.1470 yen, a gain of 0.19%.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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